LightSquared Has Agreement With Lenders on Auction Proces

Sept. 30 (Bloomberg) -- LightSquared Inc., Philip Falcone’s
bankrupt wireless spectrum company, resolved a dispute with
lenders on bidding procedures that the company had said could
have foiled a $2 billion offer for its assets.

The auction procedures will be submitted for formal court
approval, Matthew S. Barr, an attorney for LightSquared, told
U.S. Judge Shelley Chapman in Manhattan today. Under the
agreement, an independent committee will oversee the auction.

The lenders, who hold $1.4 billion of $1.7 billion in debt
of LightSquared’s LP unit, had objected to a plan that it said
would have given Falcone’s investment company, Harbinger Capital
Partners LLC, too much power to choose the winning bid. The
group said Harbinger opposed any sale of LightSquared assets.

“This playing field is as level as it gets,” Chapman said
at today’s hearing. The plan sends a “message to the
marketplace” that potential bidders have a chance to win the
auction, the judge said.

The company is seeking to sell its wireless-spectrum assets
under court protection and has a $2.22 billion offer from a unit
of Charlie Ergen’s Dish Network Corp.

LightSquared, based in Reston, Virginia, filed for
bankruptcy in May 2012, listing assets of $4.48 billion and debt
of $2.29 billion. U.S. regulators blocked the service after
makers and users of global positioning system devices, including
the U.S. military and commercial airlines, said LightSquared’s
signals would confound navigation gear.

Lawsuit Halt

The company today sought to halt a lawsuit that Harbinger
brought against the GPS industry, saying the case overlaps with
issues raised in the bankruptcy. LightSquared asked the court to
keep the lawsuit from going forward for 60 days as it might
“distract key LightSquared officers and employees from the
restructuring efforts at a critical stage.”

Lenders had criticized the suit.

The case was filed in August in U.S. District Court against
Deere & Co., Garmin International Inc., Trimble Navigation Ltd.,
the U.S. GPS Industry Council and the Coalition to Save Our GPS.

The defendants were accused of fraudulently failing to
disclose that they had designed their GPS devices to use certain
portions of LightSquared’s spectrum, “a fact that ultimately
delayed approval for LightSquared’s network and led to
LightSquared filing for bankruptcy,” the company said.

‘Material Misrepresentations’

LightSquared had invested about $1.9 billion to build a
business based on “material misrepresentations and omissions”
made by the defendants, according to the lawsuit.

Also today, a lawsuit that accused Falcone and Harbinger of
misleading investors about the firm’s stake in LightSquared was
narrowed by a U.S. judge.

U.S. District Judge Alison Nathan in Manhattan today
dismissed all or part of seven of the nine counts in the
lawsuit. She gave the plaintiffs one more chance to amend the
complaint to address her rulings.

The investors claimed Harbinger acquired an interest in
LightSquared, formerly known as SkyTerra Communications Inc.,
without adequately warning investors of the risks. Harbinger
eventually owned 60 percent of LightSquared, which was
developing a high-speed wireless broadband network before it
filed for bankruptcy last year.

The original suit was filed in February 2012 by Lili Schad,
of Wallkill, New York, who said she invested $4 million with
Harbinger. Schad, who is seeking to represent a class of
Harbinger investors, said she wasn’t told LightSquared’s plan to
build the network faced obstacles from U.S. regulators.

The bankruptcy case is In re LightSquared Inc., 12-bk-12080, U.S. Bankruptcy Court, Southern District of New York
(Manhattan). The investor case is Schad v. Harbinger Capital
Partners LLC, 12-cv-01244, U.S. District Court, Southern
District of New York (Manhattan).